The Maryland attorney general’s office ordered Towson-based High Point Wealth Management to halt a business it runs from the former offices of a financial management company that faced penalties last year for fraudulently misrepresenting investment risks.
The securities division of Attorney General Brian E. Frosh’s office accused High Point Wealth, High Point Insurance Solutions and co-founder and CEO Perry C. Santillo Jr. of selling unregistered securities, acting as an unregistered investment adviser, broker-dealer and issuer agent and engaging in fraud. The division issued a cease-and-desist order Friday against Santillo and his businesses.
Santillo could not be reached Friday.
Frosh said in an announcement that his office “acted swiftly to protect Maryland investors against further losses from recommendations made by an unlicensed investment adviser.”
His office is seeking fines and to permanently bar Santillo and his company from doing business in Maryland. Santillo, a Baltimore resident, has never been registered as a broker-dealer, broker dealer agent or investment adviser in Maryland. His companies have never been registered as a broker dealer or investment adviser in the state, according to the state’s order.
High Point is located in offices at 100 West Road, the former corporate headquarters of Everest Wealth Management, the firm behind the “Money Guys” commercials.
In September, a Baltimore County circuit judge upheld penalties Frosh’s office had levied against Everest. The state securities division in March had suspended Everest Investment Advisors’ registration as an investment adviser for one year and revoked owner Philip Rousseaux’s registration. That order also barred Rousseaux and Everest Wealth from the investment advisory business and fined him and his companies a combined $255,000. Rousseaux had said he planned to appeal to the state Court of Special Appeals.
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The state’s order Friday against High Point said Santillo and his companies began contacting former Everest clients in November, explaining that High Point had acquired Everest Wealth Management. A letter last month from High Point to former Everest clients said Rousseaux “underwent an extensive and time consuming search to find a financial advisor who will be able to seamlessly replicate and enhance the care and dedication that the Everest team provided you with in the past,” according to the state’s order.
Between November and last month, High Point advised at least 23 former Everest clients to sell more than $2 million in securities in their accounts and transfer the proceeds to a new accounts at Quest IRA Inc., a Houston-based provider of self-directed individual retirement accounts.
“A self-directed IRA is not suitable for an investor who is unprepared to manage his or her own investments and who is accustomed to relying on the services of an investment adviser,” the state’s order says.
It adds that the Securities and Exchange Commission has warned about the risks of self-directed IRAs.
High Point representatives met with former Everest clients and recommended they invest with an unnamed third-party adviser, the state alleges. Without making required disclosures, they advised one client to surrender an annuity that caused him to incur a loss of more than $34,000 in surrender fees.
The state said High Point has compensated or agreed to compensate Rousseaux, “a person barred from the securities and investment advisory business in Maryland.”
High Point faces penalties of up to $5,000 per violation. High Point and Santillo have 15 days to respond to the order and request a hearing.